Hong Kong country brief

Political Overview

Hong Kong, officially known as the Hong Kong Special Administrative Region of the People's Republic of China, is a former British territory that reverted to Chinese sovereignty on 1 July 1997. Hong Kong is governed by the Basic Law of the Hong Kong Special Administrative Region of the People's Republic of China (the Basic Law), passed by China's National People's Congress (NPC) in 1990. The Basic Law serves as Hong Kong's 'mini-constitution'. It provides for independent executive, legislative and judicial powers, and gives the territory a high degree of autonomy under the principle of 'one country, two systems' in all areas except defence and foreign affairs (for which China is responsible).  

Hong Kong can conclude and implement agreements with states, regions and international organisations. It does so in areas such as the economy, trade, shipping, fishing regulation, communications, tourism, culture and sport. Hong Kong is a member of the World Trade Organization (as a separate customs territory) and the Asia-Pacific Economic Cooperation (APEC) forum.

Chief Executive

Under Hong Kong's 'executive-led' system, a form of government substantially inherited from the British colonial administration, the Chief Executive (CE) heads the government and is responsible for implementing the Basic Law and other laws of Hong Kong. The CE makes policy decisions and has the power to initiate legislation. According to the Basic Law, the CE is 'accountable to the Central People's Government and the Hong Kong Special Administrative Region'.

The CE is appointed by Beijing after election by an Election Committee, whose 1,200 members are themselves elected through a limited franchise from a number of professional, business and community bodies, Hong Kong deputies to the NPC, and Hong Kong members of the Chinese People's Political Consultative Conference. Chief Executives are appointed for a period of five years. On 1 July 2017, Mrs Carrie Lam Cheng Yuet-ngor was sworn as Hong Kong's fourth CE after an election on 26 March 2017. The previous CE was Mr Leung Chun-ying.

Legislative Council

The major function of the Legislative Council (LegCo) is to enact laws, examine and approve budgetary matters, monitor the government's performance, and debate issues of public interest. The LegCo also endorses the appointment and removal of judges of the Court of Final Appeal. It cannot initiate bills involving government expenditure, limiting its role in policy development. Its meetings are open to the public.

Elections for the sixth LegCo took place on 4 September 2016, with all 70 members elected for a term of four years. Of the LegCo 70 seats, 40 are directly elected by voters (35 from geographical constituencies and five from 'super-seat' functional constituencies) with the remaining 30 elected indirectly by the members of traditional functional constituencies representing occupational and other special interest groups.

Currently no institutions of government in Hong Kong are elected through universal suffrage, although universal suffrage in Chief Executive and LegCo elections is the "ultimate aim" of constitutional development under the Basic Law.

Judiciary

Hong Kong's legal system is based on English Common Law. Under the Basic Law, the judiciary is independent of the executive and legislative branches of government. The Court of Final Appeal replaced the British Privy Council as the highest appellate court in Hong Kong on 1 July 1997.

China's National People's Congress Standing Committee (NPCSC) has the power of final interpretation of the Basic Law. The NPCSC has exercised this power on five occasions concerning the right of abode (1999), universal suffrage (2004), the term of office of the Chief Executive (2005), and state immunity (2011). On 7 November 2016, the NPCSC issued an interpretation on Article 104 of the Basic Law, which states that lawmakers must swear allegiance to Hong Kong as part of China in the form of an oath when they take office.

As Hong Kong is Australia's leading business base in North-east Asia, we have a substantial stake in the integrity of Hong Kong's legal system. Distinguished Australian jurists have been appointed to the Court of Final Appeal as non-permanent judges, including former Chief Justice of the NSW Supreme Court, James Spigelman and former justices of the High Court, Sir Francis Gerard Brennan, Sir Daryl Dawson, Robert French, Anthony Murray Gleeson, William Gummow, Sir Anthony Mason and Michael McHugh. Messrs French, Gleeson, Gummow and Spigelman are currently appointed to the Court of Final Appeal.

Economic Overview

Hong Kong occupies an area smaller than the Australian Capital Territory and has a population of 7.4 million, about one-third of Australia's. In GDP (nominal terms) it stands as the 33rd-largest economy in the world at nearly US$321 billion in 2016.

Hong Kong's economic growth and prosperity have been underpinned by an open trade and investment regime complemented by a highly educated and flexible workforce and a transparent legal and regulatory environment. The city has evolved into an efficient global and regional transport and trade hub.

The free movement of capital in and out of Hong Kong has accelerated the city's development as an international commercial and financial centre. A strong institutional framework including the rule of law has attracted a number of important corporate headquarters to Hong Kong. It has emerged as a major provider of services to China and is the mainland's designated centre for the internationalisation of the Renminbi (China's currency).

Hong Kong's economic integration with mainland China developed through the 1980s with the establishment of China's first Special Economic Zone in Shenzhen, across the border, transforming a fishing village into a city of over 10 million people. Investment by Hong Kong industrialists across the Pearl River Delta (PRD), arching from Hong Kong in the East through Shenzhen, Dongguan, Guangzhou, Foshan, Zhongshan and Zhuhai to Macau in the West, has been one of the main drivers of China's rapid economic modernisation.

Since 2004, the China-Hong Kong Closer Economic Partnership Arrangement (CEPA) has accelerated integration between Hong Kong and the PRD, giving favourable treatment to Hong Kong manufactures and services. In July 2017, Hong Kong signed two economic agreements with the Central Government under CEPA, including an Investment Agreement and an Agreement on Economic and Technical Cooperation. At the same time, Hong Kong and the Central Government also signed a Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation in the Development of the Bay Area. 

The lack of discrimination against foreign-owned companies has allowed Australian companies to benefit from CEPA and gain greater access to mainland China. Infrastructure projects such as a bridge linking Hong Kong, Macau and Zhuhai (commenced in November 2011, expected to be completed in late 2017) and a high-speed rail link to Guangzhou via Shenzhen (commenced in January 2010, due to be completed in late 2018) are expected to improve transport links with the region.

In 2016, real GDP growth in Hong Kong was 1.9 per cent, and the unemployment rate was steady at 3.3 per cent. The underlying inflation rate remained steady at 2.6 per cent. Forecast GDP growth for 2017 is 2-3 per cent, with consumer and tourist spending expected to remain subdued.

Bilateral Relations

Australia has extensive and enduring interests in Hong Kong built on strong trade and investment connections and close people to people links. The Australian Government supports Hong Kong's high degree of autonomy as provided for in the Basic Law and in accordance with China's policy of observing 'one country, two systems'. 

The Australian Consulate-General represents the Australian Government in Hong Kong. In Australia, the Hong Kong Government is represented through the Hong Kong Economic and Trade Office based in Sydney.

At an event to mark the 20th anniversary of the establishment of the Hong Kong Special Administrative Region in July 2017, Foreign Minister Julie Bishop spoke about the importance of bilateral relations between Australia and Hong Kong. See 20th anniversary of the establishment of the Hong Kong Special Administrative Region of the People's Republic of China.

People to people links

Hong Kong has one of the largest Australian communities abroad with around 100,000 Australians residing in Hong Kong.  Almost 87,000 people born in Hong Kong now live in Australia.  

Education cooperation between Australia and Hong Kong continues to strengthen.  In 2016, there were 119 formal agreements between Australia and Hong Kong, which covered a range of activities including student and staff exchange, academic and research collaboration, and study abroad.

It is estimated that around 120,000 students from Hong Kong have gained qualifications from Australian universities. In 2015 and 2016, Hong Kong ranked 10th as a source country for international students to Australia. In 2016, more than 13,000 students from Hong Kong studied in Australia across all sectors, an increase of 8 per cent over the previous period.From 2002 to 2016 over 22,000 students from Hong Kong completed an Australian higher education course. In 2015, Hong Kong ranked as Australia's 15th most popular overseas study destination for Australian students. 

In October 2013, Hong Kong agreed to participate in the pilot phase of the New Colombo Plan. The New Colombo Plan is a signature Australian Government initiative to lift knowledge of the Indo Pacific in Australia by supporting Australian undergraduates to study and undertake internships in the  region. In the first five years of the program (2014-18) over 1,100 students have been funded to undertake New Colombo Plan experiences  in Hong Kong, across diverse fields including business, communications, education, engineering, health, science and urban design. 

The Endeavour Australia Cheung Kong Awards represent a unique partnership between the Australian Government and Hong Kong-based Cheung Kong Group to support educational exchange between undergraduate and postgraduate students in Australia and Asia.  Since 2004, over 2,600 students have been provided with scholarship opportunities in the region through these Awards, including from Hong Kong to Australia, and from Australia to Hong Kong.

The Australia-China Council (ACC) was established by the Australian Government in 1978 to promote people-to-people links and to enhance mutual cooperation with China. The ACC has supported several projects in and with Hong Kong. For example, supported by ACC funding, the 2016 Australia-China Youth Dialogue (ACYD) was held in Hong Kong and Shenzhen. The ACYD is the preeminent inter-disciplinary early career leaders' dialogue between Australia and Greater China. In 2016, participants discussed a range of topics relevant to Australia-China relations including, trade, security, diplomacy, urbanisation, technology, innovation, entrepreneurship, banking and finance.

Bilateral trade and investment

On 16 May 2017, Trade, Tourism and Investment Minister, the Hon Steven Ciobo MP, and his then counterpart, Secretary for Commerce and Economic Development, Mr Gregory So, launched negotiations for an Australia-Hong Kong free trade agreement (FTA). Australia is seeking a comprehensive FTA that meets the needs of Australian goods and services exporters and investors. An Australia-Hong Kong FTA would strengthen Australia's relationship with one of its most significant trade partners, complement Australia's FTA with China and further integrate the Australian economy with Asia.  For more information about the prospective FTA, see Australia-Hong Kong Free Trade Agreement.

Hong Kong is the fifth largest investor in Australia, with total foreign investment amounting to $100.9 billion in 2016.  Investment sectors include electricity supply, natural gas, mining, transport, vineyards, food processing, port infrastructure, light industry, insurance, engineering, telecommunications and biotechnology. Hong Kong businesses see Australia as a safe, reliable and open investment destination with a well-performing and well-managed economy.

Hong Kong is also an attractive investment destination for Australia. It is the tenth largest destination for total Australian investment abroad (by stock), worth $52.9 billion in 2016. Sectors of interest include banking and finance, construction and engineering, health and medical services, telecommunications, insurance, legal services, education, information technology, consulting, logistics, and transport.

Hong Kong is Australia's leading business base in East Asia.  More than 600 Australian companies, including the four major banks, have a major presence in Hong Kong. The Australian Chamber of Commerce in Hong Kong is Australia's largest offshore Chamber of Commerce. Australian business is drawn to Hong Kong because of the transparency and efficiency of its regulatory environment, the integrity of Hong Kong's financial markets and the rule of law, backed by an independent judiciary and the freedoms of an open civil society. 

Hong Kong's location gives Australian companies an important base for commercial engagement with China and neighbouring countries in Southeast Asia.

Australia and Hong Kong have a longstanding trade relationship. Hong Kong was Australia's twelfth largest trading partner overall in 2016, with total two-way trade in goods and services worth $16.3 billion. In 2016, Hong Kong was Australia's seventh most important destination for merchandise exports ($10 billion) and seventh-largest services market ($2.5 billion). Australia's major merchandise exports were gold, edible products and preparations, telecommunications equipment and parts, and fruit and nuts.  

Australia is an important source of high-quality food and beverages for Hong Kong's hotel and restaurant sector — featured exports include wines, fresh and chilled seafood, premium fruit, nuts, vegetables and dairy products. Hong Kong's strategy to become a wine trading and distribution centre for the Asian region presents opportunities for Australian wine producers and for providers of wine-related services, such as storage and auctioning.

Australia's major imports from Hong Kong in 2016 were gold, telecommunications equipment and parts, jewellery, printed matter, pearls and gems, optical goods and monitors, and edible products and preparations. Bilateral services trade with Hong Kong is centred on transport, recreational travel and business services.

For more information about business opportunities in Hong Kong, see Information on doing business and opportunities in Hong Kong

High level visits

July 2017:  Infrastructure and Transport Minister, the Hon Darren Chester MP visited Hong Kong where he met Secretary for Transport and Housing, Mr Frank Chan, representatives of transport companies, and a number of regional infrastructure investors and business leaders.

July 2017:  Minister for Trade, Tourism and Investment, the Hon Steven Ciobo visited Hong Kong and met with his counterpart, the Secretary for Commerce and Economic Development, Mr Edward Yau.

May 2017:  Minister for Trade, Tourism and Investment, the Hon Steven Ciobo visited Hong Kong to launch negotiations for an Australia-Hong Kong Free Trade Agreement with his then counterpart, Secretary for Commerce and Economic Development, Mr Gregory So. 

November 2016: Finance Minister, the Hon Mathias Cormann visited Hong Kong to attend the Asia-Pacific Conference of German Business. He also met with Hong Kong Financial Secretary, Mr John Tsang, and Secretary for Finance Services and Treasury, Professor KC Chan.

November 2016: Hong Kong Secretary for Transport and Housing, Professor Anthony Cheung visited Australia to meet Minister for Trade, Tourism and Investment, the Hon Steven Ciobo, and Minister for Infrastructure and Transport, the Hon Darren Chester.

November 2016: Hong Kong Secretary for Financial Services and the Treasury, Professor KC Chan visited Australia to meet Treasurer, the Hon Scott Morrison, and Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer.

September 2016: Minister for Trade, Tourism and Investment, the Hon Steven Ciobo visited Hong Kong where he met Secretary for Commerce and Economic Development, Mr Gregory So, as well as a number of regional investors.

April 2016: Minister for Trade, Tourism and Investment, the Hon Steven Ciobo visited Hong Kong leading the Australian business delegation for the biennial Australia Week in China (AWIC).

October 2015: Then Minister for Trade and Investment, the Hon Andrew Robb visited Hong Kong to promote tourism investment in Australia. He met Hong Kong Secretary for Commerce and Economic Development, Mr Gregory So.

September 2015: Hong Kong Chief Secretary for Administration, Mrs Carrie Lam visited Australia as a Guest of Government.

April 2015: Then Minister for Trade and Investment, the Hon Andrew Robb visited Hong Kong to meet with his counterpart, Secretary for Commerce and Economic Development, Mr Gregory So, as well as current and potential foreign investors.
Last Updated: 4 September 2017